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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#291

Post by bluedevil2k »

cambalache wrote: post #195
bluedevil2k wrote: post #68

Earlier quoted context omitted.

I'm with OP - $3.7M seems like a lot, but it really isn't enough to retire on. I assume he'll need to pay taxes on that, a 20% long-term capital gains tax. Brings it down to about $3M. Being generous and giving him 3.5% return (real return) a year in fixed income, that's only $105,000 a year in income, which he'll need to pay taxes on as well. He'll net out around $85k a year.

I dont know how to tell you this, but 99% of the world population (and I am pretty sure at least 85-90% of Americans) WONT retire with anything even close to $3.7 MM.

He’s NOT 85% of Americans, he’s a tech entrepreneur who is capable of building and selling businesses with 7 figure exits. Personally I wouldn’t want to retire on only $85k if I had that kind of potential. At that income you still need to budget for food and travel - I’d prefer a life where I can eat out when I want, hop a plane with my wife and go somewhere whenever I want. Retirement is about freedom!

Re: I sold Baremetrics

#292

Post by bluedevil2k »

LandR wrote: post #83
bluedevil2k wrote: post #68

Earlier quoted context omitted.

I'm with OP - $3.7M seems like a lot, but it really isn't enough to retire on. I assume he'll need to pay taxes on that, a 20% long-term capital gains tax. Brings it down to about $3M. Being generous and giving him 3.5% return (real return) a year in fixed income, that's only $105,000 a year in income, which he'll need to pay taxes on as well. He'll net out around $85k a year.

$85k a year is surely enough to live off without working? I'm in the UK, if I could earn a guaranteed £40k a year without working I'd be set for life and would have a pretty great life! That's would give me close to twice the national average salary. £80k a year would put you into the tiny percent of top earners.

Don’t forget in America he needs to spend $12k a year on health care. And that’s like a minimum, last time I checked Obamacare, those kind of plans had $8-10k max out of pocket too.

Re: I sold Baremetrics

#293

Post by bluedevil2k »

fortydegrees wrote: post #90
bluedevil2k wrote: post #68

Earlier quoted context omitted.

I'm with OP - $3.7M seems like a lot, but it really isn't enough to retire on. I assume he'll need to pay taxes on that, a 20% long-term capital gains tax. Brings it down to about $3M. Being generous and giving him 3.5% return (real return) a year in fixed income, that's only $105,000 a year in income, which he'll need to pay taxes on as well. He'll net out around $85k a year.

Even if he didn't earn any interest and never earned another penny, at an $85k/yr burn, that $3M will last 35 years. Seems alright?

What happens when he lives 36 years?

Re: I sold Baremetrics

#294

Post by caffeine »

gumby wrote: post #252
caffeine wrote: post #217

Earlier quoted context omitted.

I think it's extremely valuable as a lesson for prospective early employees. My own personal takeaway is crystal clear: if you want to benefit from the sale of something, you need to be the owner! Much like a gardener or builder who doesn't get paid out when the house gets sold, unless you have a LOT of equity as an early employee, you will not be getting founder-type payouts (and rightly so as you took little to no…

Companies don't have to be run that way. When we sold Cygnus the receptionist was able to pay off her mortgage and other debt. She was a 65 year old divorced woman and now she could afford to retire (she stayed with the company though). Of course we were a traditional SV startup -- people are different these days.

Well I think the fact that you're a nice person who made sure the secretary was taken care of is great!

But I wouldn't start generally inferring that it makes sense to take secretary jobs at startups on the chance the founders decide to pay off my mortgage.. Baremetrics is a more typical case, I would think.

Re: I sold Baremetrics

#295

Post by bluedevil2k »

ceejayoz wrote: post #96
bluedevil2k wrote: post #68

Earlier quoted context omitted.

I'm with OP - $3.7M seems like a lot, but it really isn't enough to retire on. I assume he'll need to pay taxes on that, a 20% long-term capital gains tax. Brings it down to about $3M. Being generous and giving him 3.5% return (real return) a year in fixed income, that's only $105,000 a year in income, which he'll need to pay taxes on as well. He'll net out around $85k a year.

It's probably a mistake to assume he'll never earn another penny in income outside this payment.

That’s what retirement means and it’s what he indicated in the story.

Re: I sold Baremetrics

#296

Post by tinyhouse »

Wow, such a great read. I love people who are so open and honest. btw, how does tax work in the US for acquisitions? is the money he's getting is taxed the same as income?

Re: I sold Baremetrics

#297

Post by mikepurvis »

franciscomello wrote: post #156
ccmcarey wrote: post #5

I've always loved the transparency and frank writings by Baremetrics. > As part of the structure of the deal, Xenon guaranteed I’d take home $3.7m, regardless of what came up during due diligence Interesting, I wonder how this is structured - surely there are items that can come up during due diligence that are deal-breakers for Xenon, and surely due-diligence is performed before the contract is closed? > But they we…

Through the investors' eyes, "the proceeds from the sale wouldn't even pay for our time and legal fees in reviewing and signing the transaction documents." That's basically it.

And they probably have "write it off" as a very well lubricated standard procedure costing them as little as possible.

Re: I sold Baremetrics

#298

Post by RedditKon »

georgeecollins wrote: post #216
RedditKon wrote: post #175

Earlier quoted context omitted.

I feel the same way, especially in regards to everyone opining on the investors taking a markdown. For context, it was General Catalyst and Bessemer. - General Catalyst: $2.5B+ in Assets Under Management - Bessemer: $4B in Assets Under Management DISCLAIMER: If you take venture capital, you should obviously always do it as a responsible fiduciary of both the company and the capital. With that said, I'm positive both…

I don't want to make any moral judgements against people making business decisions, in particular this founder for making the best deal possible. Good for him. However, no matter how much money General Catalyst or Bessemer made last year, I would not want to invest with them going forward. I get that this is only money on the margins, and they get a benefit from a write off. Still, how hard would they have had to fig…

You don't win 100x-ers by squeezing founders over tiny exits.

VC funds have a duty to their LP base to maximize returns, but I would argue the good will generated by moves like this are what protect their ability to get into "hot" companies and thus protect those returns. Pursuing your strategy would likely harm the fund's reputation and their ability to return LP capital in the future.

Also - a point of nuance. VCs are not in the habit of writing off everything, that would be a false takeaway from this article. If the amount invested was bigger or the exit was more like 2x or 3x for the VCs, your points of criticism would be more valid.

Re: I sold Baremetrics

#299

Post by treis »

rjyoungling wrote: post #218
relaunched wrote: post #154

This warmed my heart. >>>General Catalyst’s (who had the lion’s share of that $800k) response showed just how classy they are: “We recognize the work that’s gone into the past 7 years and it sounds like this is a great landing spot for the team. We’re grateful for the opportunity to have supported you along the way.”

Yeah, same here. That was such a class act. I really hope that they get some serendipity like deal flow from that good will.

Maybe I'm just the Grinch but some rich dudes giving $800k to one rich dude doesn't warm my heart. Especially as someone who's gotten (relatively) screwed twice now when owners sold out.

It also goes to the heart of how messed up our economic system can be. I can be mollified by saying that he worked hard and earned his ~$4 million by building a business. But I can't internally justify the VCs gifting him $800k for AFAICT nothing. I'm going to have to work for the next 4-5 years for that but he gets it basically on the whim of some person at a VC.

Re: I sold Baremetrics

#300

Post by nxmnxm99 »

Veen wrote: post #86
nxmnxm99 wrote: post #76

Earlier quoted context omitted.

“Even Sam Altman” really, the patron saint of getting credit for other people’s work and risk agrees with that waffley sentiment? Shocker

Isn’t getting credit and cash for other people’s work exactly what you’re advocating.

Not at all, it only seems that way to you because you have zero sense of what risk/reward actually means. Employees were paid for their value determined by the market. Josh is just now being compensated for the immense amount of risk and deferred cash he gave up to build this company in the early days.

There's a reason the market doesn't compensate every early employee at a meh SaaS company with millions.

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